Boat Finance Business Boat Loans Commercial Hire Purchase Commercial Hire Purchase
A commercial hire purchase is a finance option where a finance lender provides a loan or finance facility for the purchase of a boat that is predominantly for business use such as a charter boat or commercial fishing boat. With a commercial hire purchase the financier is the owner of the boat at the time that the agreement is entered into.
Taxation implications for a commercial hire purchase
A commercial hire purchase can be a difficult loan to explain, but if you view it as a form of hybrid loan it is slightly easier to understand. It is not strictly a lease as for tax purposes you are deemed to be the owner of the goods but unlike a chattel mortgage you do not hold legal title of the boat financed until all monies owing are paid. The key feature of a commercial hire purchase are;
- A business that accounts for its GST using the "accrual's" method of accounting is entitled to claim all of their input tax credits in relation to the boat purchase when they lodge their next BAS ie: If a taxpayer who accounts for GST on an accrual basis acquired a $440,000 boat, then they would be entitled to input tax credits of $40,000 (i.e. 1/11th of $440,000).
- You can generally choose to finance all or just a portion of the purchase price and a more flexible residual option than leasing is normally available.
- Accrual basis taxpayers still retain their rights to depreciation in relation to the boat acquired under a commercial hire purchase.
- The interest component and any establishment fees on the finance will also be a claimable expense.
Commercial hire purchase terms
Terms generally range from 12 to 60 months (occasionally longer), repayments are made in advance and can be made monthly, quarterly, bi-annually, or yearly.
Who does a commercial hire purchase suit?
A commercial hire purchase may suit both individuals and companies, unlike a lease a commercial hire purchase provides some flexibility over the amount financed and the residual value. If you wish to to have an 'off balance sheet' type of loan or want to protect equity in your business, be sure to investigate your boat leasing options. Attention again should be paid before signing a contract, that the term of the loan, the residual value and the monthly repayments are in line with your short and long term requirements.
Which boat loan option is right for you?
Deciding on the right Boat finance option for your situation can sometimes be confusing, Commercial Hire Purchase, Chattel Mortgage, Boat Lease are just a few of the boat financing options, Platinum Direct Finance can assist with your decision making and make the process simple and easy. Use our "Which boat loan product is right for you?" today!
Why use Platinum Direct Finance?
The Platinum Direct Finance group of companies will finance over 800 million dollars worth of equipment and car finance this year! Due to this volume and buying power, we can give our clients access to the best boat finance rates and boat financing products across Australia.
Need further information?
Either complete the friendly boat finance enquiry form and one of our boat finance experts will contact you shortly or talk to an experienced finance consultant on 1300 554 553.